Shareholders of a Shanghai-listed property developer have refused to give the Communist Party a role in its corporate governance, in a rare revolt against the leadership’s latest instructions that the party should have a bigger role in state businesses.
A shareholder meeting of the Tianjin Realty Development, the listing vehicle of the Tianjin government’s commercial real estate arm, voted down a proposal to set up a party committee in the company, according to a company announcement on the Shanghai Stock Exchange website.
Although Tianjin Realty said the proposal to give the party a role in governance was made in accordance with a key document from top leaders along with instructions from the Tianjin party committee and the state assets watchdog, it was approved by only 62 per cent of the shareholders, just short of the required two-thirds of votes, the company said.
The company’s minority shareholders, defined as those having an equity stake below 5 per cent, proved particularly rebellious, with 90 per cent voting against the proposal, according to the company’s statement.
The company’s shareholder structure at the end of September showed that, apart from the state-owned parent’s 25.11 per cent equity stake, all other shareholders held less than 5 per cent each.
UBS AG was the second-biggest shareholder with a 4.03 per cent equity stake, followed by a mainland private property developer with 2.81 per cent and a private individual holding 2.32 per cent.
The company did not specify which shareholders voted down the proposal.
The company’s investor relations department declined to comment.
In a letter of legal opinion published on the stock exchange’s website, law firm Tianjin JD Hands said the voting results of the shareholder meeting on January 6 were effective and legitimate.
The case of Tianjin Realty is a rare example of potential conflicts arising between President Xi Jinping’s idea of having a powerful Communist Party presence in state companies and the desire for a rules-based corporate governance system.
At a high-profile meeting on state-owned enterprises three months ago, Xi said party organs must serve as the ultimate bosses of state-owned enterprises and the final decisionmaker on key business and personnel decisions.
Tianjin Realty’s proposal to change the articles of incorporation, the company’s constitution, was made following Xi’s orders. According to a draft released earlier, the company would insert several clauses giving the party a dominant say in corporate affairs, such as “the opinions of the Communist Party organ must be sought before all major decisions by the board of directors”. Another proposal suggested that appointments of all senior executives would be reviewed by the party
Article source: http://www.scmp.com/news/china/policies-politics/article/2062061/chinese-company-shareholders-vote-no-corporate-role